Financial Rehabilitation and Insolvency Act

Case Overview and Summary

Summary of Republic Act No. 10142 (Financial Rehabilitation and Insolvency Act of 2010):

Definitions and Coverage (Sections 4-5):
- Defines key terms like debtor, creditor, claims, commencement date, rehabilitation, liquidation, etc.
- Excludes banks, insurance companies, pre-need companies, and government agencies from the definition of debtor.

Court-Supervised Rehabilitation (Sections 12-75):
- Allows insolvent debtors or creditors to initiate voluntary or involuntary rehabilitation proceedings.
- Outlines the process for filing a petition, issuing a commencement order, and appointing a rehabilitation receiver.
- Provides for the determination of claims, governance, use and disposal of assets, and avoidance of certain transactions.
- Requires the submission and approval of a rehabilitation plan by creditors and the court.
- Specifies the effects of confirmation of the rehabilitation plan.
- Allows for termination of proceedings upon successful implementation or failure of rehabilitation.

Pre-Negotiated Rehabilitation (Sections 76-82):
- Allows debtors and creditors to file a pre-negotiated rehabilitation plan endorsed by creditors holding at least two-thirds of total liabilities.
- Outlines the process for court approval of the pre-negotiated plan.

Out-of-Court Restructuring (Sections 83-89):
- Recognizes out-of-court restructuring agreements approved by creditors holding specified majorities of secured and unsecured claims.
- Provides for a standstill period of up to 120 days during negotiations.
- Allows for court assistance in the execution or implementation of the restructuring plan.

Liquidation of Juridical Debtors (Sections 90-92):
- Allows for voluntary or involuntary liquidation of insolvent juridical debtors.
- Outlines the process for filing a petition, issuing a liquidation order, and appointing a liquidator.
- Preserves the rights of secured creditors.

Insolvency of Individual Debtors (Sections 94-102):
- Allows individual debtors to petition for suspension of payments or voluntary liquidation.
- Outlines the process for creditors to initiate involuntary liquidation proceedings against individual debtors.

Provisions Common to Liquidation (Sections 111-136):
- Outlines the effects of a liquidation order and the rights of secured creditors.
- Provides for the appointment, qualifications, powers, and duties of a liquidator.
- Covers the determination of claims, avoidance of certain transactions, and the liquidation plan.
- Includes provisions for the liquidation of securities market participants.

Ancillary Proceedings (Sections 137-142):
- Allows the court to provide assistance in the liquidation of banks and financial institutions under rehabilitation receivership.
- Adopts the UNCITRAL Model Law on Cross-Border Insolvency for cross-border insolvency proceedings.

Funds for Rehabilitation of Government-Owned Corporations (Section 143):
- Requires public funds for the rehabilitation of government-owned corporations to be appropriated by Congress and supported by available funds.

Miscellaneous Provisions (Sections 144-150):
- Covers the applicability of provisions, penalties for certain acts, application to pending cases and contracts, repealing and separability clauses, and effectivity.